30-something saving for retirement

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Q: I consider myself very good at saving money for and with my family as well as managing my family’s budget. We have a young toddler, and my wife and I are still building our family. I am 34, have been with FERS (active employee) since I was 33, and I have four years of active military time I am almost done buying back. I have my wife saving a little more than 11 percent of her incoming from teaching school (company doesn’t match), and I save 15 percent per paycheck (20 percent if you count my federal match). I am very unsure of having anything except G Fund Thrift Savings Plan savings,  but I used to be the exact opposite.

I was an accountant in Boston before volunteering for the war, and my retirement seemed to always be losing no matter what I did (or gaining, but not by much). While in the Army, I was saving at times 30 percent and usually 25 percent, but again, my money seemed to stay at the same balance. I would deposit hundreds of dollars a paycheck and I was just treading water. Granted this was right before the bubble burst with the economy (I got my honorable discharge in spring 2008). I was also in the L Funds (the most aggressive option — L40, I think).

I have two questions. First, is this an irrational fear about the market? And second, if I save my money as-is for another 19 or 22 years before retirement only in the G Fund, is this crazy and/or will this money add up and be a good retirement fund? I believe my wife has about $20,000 saved and I have a little more than $22,000. I am good at keeping the minimum amounts in my money market to yield the higher interest and doing the little things like paying credit card balances every month before they collect interest and using my American Express card, which gives me a cash-back bonus. I just can’t seem to figure out what to do with TSP; that’s why when the economy thing happened: I put all retirement and future allocations in the G Fund or conservative funds until further notice. Please help.

A: It’s not crazy, and given your lack of investment management capability, it’s probably the best course of action. When in doubt, the G Fund is the safest bet. Whether or not it will grow to be a good retirement fund will depend upon your expectations. What’s good for you might be a disaster for someone else. It sounds like you’ll be investing based on your comfort level and will then take what you get in the end.

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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

1 Comment

  1. It’s a mistake to put everything into the G fund and leave it there. You missed out on all the market recovery if you did that. If you have another 20 years before retirement, you should contribute to the F,C,S, and I funds as well. 20 years is a long time and your investments will be helped by “dollar cost averaging.”
    Talk to a financial adviser or invest in the L fund if you want the easy way.

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